Correlation Between Gratifii and Collins Foods

Can any of the company-specific risk be diversified away by investing in both Gratifii and Collins Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gratifii and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gratifii and Collins Foods, you can compare the effects of market volatilities on Gratifii and Collins Foods and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gratifii with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gratifii and Collins Foods.

Diversification Opportunities for Gratifii and Collins Foods

0.43

Correlation Coefficient

Gratifii  Collins Foods

Very weak diversification

The 3 months correlation between Gratifii and Collins is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gratifii and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Gratifii is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gratifii are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Gratifii i.e., Gratifii and Collins Foods go up and down completely randomly.

Pair Corralation between Gratifii and Collins Foods

Assuming the 90 days trading horizon Gratifii is expected to generate 1.14 times less return on investment than Collins Foods. In addition to that, Gratifii is 2.74 times more volatile than Collins Foods. It trades about 0.04 of its total potential returns per unit of risk. Collins Foods is currently generating about 0.13 per unit of volatility. If you would invest  730.00  in Collins Foods on December 23, 2024 and sell it today you would earn a total of  126.00  from holding Collins Foods or generate 17.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Gratifii  vs.  Collins Foods

Gratifii

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gratifii are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Gratifii unveiled solid returns over the last few months and may actually be approaching a breakup point.

Collins Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Collins Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gratifii and Collins Foods

The main advantage of trading using opposite Gratifii and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gratifii position performs unexpectedly, Collins Foods can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Collins Foods will offset losses from the drop in Collins Foods' long position.

The idea behind Gratifii and Collins Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.